Pictured above: Minister of Finance, Nicola Willis.
Budget 2025 – aka the no BS budget – has been welcomed by sections of the business community as a credible and growth-focused response to economic pressures, though reactions to proposed changes to KiwiSaver have exposed growing concerns around fairness and long-term savings outcomes.
Finance Minister Nicola Willis has delivered Budget 2025 focused on investment, infrastructure, and fiscal restraint — earning praise from big business, but leaving many small firms seeking more direct support.
BusinessNZ has thrown its support behind the Budget, describing it as “a credible and growth-oriented package that supports economic growth while reinforcing a pathway back to fiscal sustainability.”
Chief Executive Katherine Rich says the Budget “rightly focuses on economic growth, productivity and investment,” noting that despite rising net debt in the short term, “this Budget’s focus on discipline – while still prioritising growth – is appropriate and timely.”
A centrepiece of the Government’s business-friendly initiatives is the Investment Boost, which allows companies to immediately deduct 20 percent of the cost of new plant, machinery, equipment, and even commercial buildings.
“This is a significant and forward-looking move that will incentivise capital upgrades and improve competitiveness,” says Rich.
She also welcomed the continued 15 percent research and development tax incentive, saying it “reinforces the importance of innovation for sustained economic growth.”
In terms of sectoral support, Rich highlights funding for education and infrastructure, saying: “It’s encouraging to see investments in education and skills development… A strong education and skills pipeline is essential to lifting productivity, meeting future labour market needs, and ensuring that businesses can access the talent they require to grow.”
Other highlights include “targeted support for the primary sector, adjustments to thin capitalisation rules to encourage foreign investment, and funding to help start-ups through improved employee share scheme tax settings.”
While noting that changes to KiwiSaver “will have cost implications for employers,” Rich adds: “The phased approach to changes will provide time to plan, and we recognise the need to ensure the long-term sustainability of New Zealand’s retirement savings system.”
Tax experts at Deloitte also praised the Investment Boost measure. Robyn Walker, Deloitte Tax Partner, says: “Budget 2025 has delivered on depreciation changes, not as generously as some would have liked, but more generously than many would have predicted.”
“This is a really positive change for businesses,” she adds.
Effective immediately, businesses can claim a 20 percent upfront deduction on qualifying new assets, including commercial buildings. The remaining value will continue to depreciate under existing tax rules.
In real terms, that means a business purchasing a $100,000 asset with a 10 percent depreciation rate could now claim $28,000 in deductions in the first year, compared with just $10,000 under the previous system.
While the Government estimates the new deduction regime could lift GDP by one percent and wages by 1.5 percent over 20 years, Walker notes that “assets must be new, or new to New Zealand; second-hand assets will not qualify.”
She also flags that urgent legislation – the Taxation (Budget Measures) Bill (No 2) – will clarify exactly what qualifies.
One of the more controversial aspects of the Budget has been changes to KiwiSaver, particularly around contribution rates and government top-ups.
From 1 April 2026, both employee and employer contributions will rise to 3.5 percent, and then to 4 percent from 2028. The Government contribution drops to 25 cents for every $1 contributed, capped at $260.72, and will be removed entirely for earners over $180,000 from 1 July 2025.
Retirement Commissioner Jane Wrightson welcomes the adoption of several key recommendations from the Commission’s 2024 review, such as the higher default contribution rate and extending employer contributions to 16- and 17-year-olds.
However, she cautioned: “While increasing contribution rates is generally beneficial for salary and wage earners who qualify for an employer contribution, not everyone benefits from these changes. The reduction in the government contribution will hit low-income earners, Māori, women, and the self-employed the hardest.”
Wrightson also raised concerns about equity, noting: “It’s a shame there are so few government incentives for a scheme that underpins private saving for retirement.”
She further urged employers to act in good faith, saying: “We also hope employers respect the spirit of the changes… passing the savings onto their staff rather than including them as part of total remuneration—which should be banned.”
While the new measures have been well received by larger businesses and advisory groups, small businesses remain cautious. As previously reported by Prospa NZ, 49 percent of SMEs were not confident the Budget would deliver meaningful support, and their top asks were tax relief and reduced red tape.
The new depreciation rules apply across business sizes, but critics argue they disproportionately benefit those with capital to invest. Many SMEs continue to face cashflow challenges, rising costs, and tighter consumer spending.
BusinessNZ congratulated Finance Minister Nicola Willis on “delivering a measured, business-aware Budget that responds to current challenges while laying the foundation for sustained economic growth and a stronger, more resilient New Zealand economy.”
Yet as the dust settles, the message from both large and small businesses is clear: The direction is right, but execution and inclusion will be key.
